Monday, November 28, 2011

There have been several very interesting articles in La Repubblica by Eugenio Scalfari defending the democratic and political nature of the government presided by Mario Monti. The prime minister is not a party politician, but he has a political past insofar as he was European Commissioner and he made important contributions to the political debate in Europe such as the Monti Report. Scalfari argues that the Monti government is also the Napolitano government, in the sense that the President of the Republic has been directly involved in its composition. The former editor of the newspaper La Repubblica argues that a government that is appointed by the President of the Republic with the support of a majority of the Parliament, but without being negotiated in its details with the party leaders, is as democratic as any other government, and may even eliminate from Italian politics some of the features that have tarnished its reputation in the recent decades. Although a verdict will have to wait, the Monti government looks more promising than its counterpart in Greece, but it also has its dark spots. Paolo Flores d’Arcais recently criticized that the only Minister that Berlusconi managed to negotiate with and impose to Monti was the Justice Minister, and that the government had more than a fair share of officials linked to the Vatican. Last week The Economist argued that technocratic governments should be in office only under exceptional reasons and for a short period of time. Experts and lay persons should share the government of collective affairs in combinations that must be fine-tuned depending on place and time. But at the end, the citizens should be in control.

Monday, November 21, 2011

Robin Wells presents her point of view about the recent walk out by some students at a class by Gregory Mankiw in Harvard University. While suggesting that staging a walk out is perhaps not the ideal method to engage in a civilized discussion, she also acknowledges that the incident should be taken as a starting point of a debate on how we teach economics. She suggests that economics should be more modest, and more balanced in terms of acknowledging real market failures and inequalities. I don't have much to add to the debate, except to suggest a possible reading list that tries to be balanced (my reading list in the course on Public Economics in the Master in Economics and Business Administration in the Autonomous University of Barcelona):

Saturday, November 12, 2011

Bye, bye Berlusconi, and please don't come back. Today has finished one of the paradoxes that has characterized Italy in the recent times. The country of Claudio Magris, Roberto Benigni, Umberto Eco, some of the greatest economists, scientists and philosophers. The country where people are articulate and educated, where people read and talk about politics. But also the country of the Vatican, the Mafia, and Berlusconi. That country has just decided in favour of decency. More than two decades ago, when the political system that he was trying to buy collapsed, he decided to perform one of the clearest examples of political vertical integration that could be seen. Instead of buying political parties, he decided to create his own. He managed to become prime minister, and during his rule he kept the ownership of his media firms, his football club, and spent most of his political time and capital trying to protect himself from judicial action derived from his implication in all sorts of corruption scandals. In the last days, the events have accelerated, but perhaps it is time to draw a few lessons:
-Although external pressure has been a key accelerator, the organized pressure from ordinary citizens and from the left were there to help make evident to anyone that Berlusconi was not a necessity.
-A President that emerged from decades of left-wing politics, Giorgio Napolitano, has been key to show that democratic institutions could show a way forward.
-Markets have been in this instance a force for good (that's what economics shows us, right? that markets may be good under some conditions...), and a technocrat will lead the solution, but the responsibility and seriousness of the center-left will make it possible that Italy (and from it the rest of Europe) has a future.

Tuesday, November 8, 2011

It may be a surprise to many that most firms even in the US are not like the traditional text-book capitalist firm. That was uncovered some time ago in the book "Shared Capitalism" (see the introduction here). This book was mentioned today in Bellaterra (where my university is located) by Prof. Vicente Salas, one of the best economists in Spain. The quotation was in the context of a presentation on firms and competitiveness. Salas has argued that one should be very careful to distinguish between a firm's competitiveness and a country's competitiveness. Strengthening the competitive position of a firm may be achieved by increasing profits without increasing productivity, thanks for example to market power or other market failures (like generating negative externalities), that may be contradictory with whatever it is to increase a country's competitiveness. A firm that shares not only its profits, but also its decision-making process, with workers and communities, may be much better towards contributing to a country's welfare. What apparently was a modest reference in business economics, was actually a call to a better society. If that call had been heeded some years ago, perhaps some countries like Spain would have had a different growth model, and today we would be facing a different scenario.